9911796707
TMI Blog1993 (6) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... d manufacturing its products from January 14, 1980 and the first sale of such product was made on the same date. As it was a newly set up small-scale industry, eligibility certificate under Notification No. 1809 F.T. dated April 1, 1976, read with Notification No. 1658F.T. dated April 1, 1980, issued under section 4AA of the Act of 1954 was granted. This was first granted from April 1, 1980 to March 31, 1981 and subsequently renewed from time to time up to January 13, 1985. As the said notifications directed that no tax shall be payable by a dealer under the said Act, the applicant did not deposit any tax and filed nil returns, which were duly accepted by the Commercial Tax Officer. Though the applicant is legally entitled to have exemption from payment of sales tax and turnover tax, the Commercial Tax Officer, by his order dated July 4, 1987, assessed it for the four quarters ending March 31, 1984 and imposed a turnover tax of Rs. 1,18,357.66 and a penalty of Rs. 2,000. Against this order an appeal was filed before the Assistant Commissioner, who dismissed the said appeal by his order dated June 4, 1991 and thereby made the applicant liable for payment of turnover tax for the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligibility certificate under the 1954 Act; but, subsequently a Full Bench of this Tribunal held in Kejriwal's case [1991] 81 STC 20; [1990] 23 STA 317 that the holders of such eligibility certificate were not entitled to exemption of turnover tax. He further submitted that a special leave petition against the said decision has been admitted by the Supreme Court and is now pending for disposal there. As regards the issue whether turnover tax will be payable by a dealer holding eligibility certificate under the Act, this has already been concluded so far as this Tribunal is concerned. It has been held in Kejriwal Electronics Private Limited v. Commercial Tax Officer [1991] 81 STC 20; [1990] 23 STA 317 that section 4AAA of the Act relating to imposition of turnover tax is a self-contained code, which separately provides for exemption of such tax by prescription; but no such prescription has been made. The Governor has been empowered under section 4AA to issue notifications for exemption of sales tax payable under section 4 of the Act. In exercise of that power the impugned notification has been issued exempting payment of sales tax in respect of specified small-scale industries. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rials fixed by the Government and the fixation of lesser price for its product in view of competition with giant public sector units who produce such raw materials for their captive use, and other established industries with known brand names. It has been further stated in the supplementary affidavit that total net profit for the relevant period was Rs. 2,63,679 whereas the turnover tax liability during the said period would be Rs. 4,70,108. 9.. Mr. Bose did not pursue the allegation that the levy of turnover tax generally is confiscatory. His grievance is that the imposition of turnover tax on the applicant-dealer, who is a small-scale industry, is not enforceable or applicable in this particular case, as such imposition is confiscatory. He advocated the proposition that if a tax is found to be confiscatory in the case of a particular dealer, such dealer may not have to pay such tax considering the facts and circumstances of the case. 10. In the affidavit-in-opposition to the supplementary affidavit, the respondents have highlighted the comparative advantages of a small-scale industrial unit vis-a-vis a large public sector industry in the matter of lesser overhead costs and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does have an impact on the financial results of an industry; the degree of such impact varying according to the incidence of such taxation. It is the incidence of a particular impost which is material and important. The rate of turnover tax and its incidence are not so significant as to have a major impact on the functioning of a business, when the very scheme envisages this levy on economically stronger section of the dealers. In fact, it is not something which it cannot bear and absorb. 14.. As regards the incidence of turnover tax the observations made by the Division Bench of the Calcutta High Court in the Century Spinning Mfg. Co. [1989] 73 STC 277; [1988] 21 STA 98 are relevant. While making reference to Hoechst Pharmaceuticals' case [1984] 55 STC I the court made the following observations: "..........their Lordships were.......of the view that the burden which worked out one naya paise per rupee could not be considered to be unreasonable on a dealer whose gross turnover was of an order of above Rs. 3 lakhs in Kodar's case [1974] 34 STC 73 (SC); [1975] 1 SCR 121; AIR 1974 SC 2272 and Rs. 10 lakhs in the other case. The tax in the present case also works out to be not more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here the assessee enjoys a special dispensation in the form of exemption of sales tax as in the present case. 18.. It will be evident from the foregoing discussion that the contention of the applicant that the impugned taxation is confiscatory in its case does not have any substance. 19.. The next contention of Mr. Bose is that the imposition of turnover tax during the period of tax holiday impedes free trade and commerce and thereby is violative of article 301 of the Constitution of India. It was further contended that the imposition is neither reasonable nor in public interest and thereby it is also violative of article 304 of the Constitution. Mr. Bose argued that sale involves movement of goods and the freedom of movement in respect of trade whether inter-State or intrastate is protected by article 301. He submitted that the imposition of the tax has inhibited sales resulting in restricted movement of goods in violation of article 301. He further submitted that President's assent has not been obtained as required in proviso to article 304(b) to cure the defect. 20.. Mr. D. Majumdar, the learned State Representative, countered the contention of Mr. Bose and submitted that un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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